Do National Elections affect real estate values? Episode #272

Todd: Hello. Welcome to Todd Miller TV joined here today with Oana. And so, you’re political science major in college.

Oana: Yes.

Todd: And so here’s the question. Do politics like right now, it’s October 2012. We’re weeks away from the election, OK? Do politics influence real estate values? Myth or fact?

Oana: Absolutely myth.

Todd: OK.

Oana: OK. Politics can’t really influence property values. Property values number one are hyperlocal. So they’re based on your neighborhood. They’re based on your city, on your employment situation, what’s going on very locally. Even local politics don’t influence property values because remember, people have to live somewhere and local politics don’t necessarily address employment because contrary to what we may hear, government doesn’t really provide employment. OK?

Todd: OK. All right.

Oana: So property values are based on supply and demand and affordability factor and things like that which have basically nothing to do with politics.

Todd: OK. So, what typically happens is when the economy goes down, people tend to lose jobs, people get foreclosed on, or they have less – there’s less demand for house and prices tend to soften. When the economy is really strong, home prices go up. And so, why is it that the president or whoever is in office gets sort of either blamed for the mess or credited for the success?

Oana: That’s a great question and that’s mostly an emotional thing because we’re looking to assign blame.

Todd: OK.

Oana: OK? Our economy is far more complicated than that.

Todd: OK.

Oana: And our success or our failure is beyond anyone person to control.

Todd: Do you think that people look at government and then think that it is what causes business to happen?

Oana: I think people would like to believe that to some extent because again, on emotional level it’s very easy for us to assign blame or credit.

Todd: OK.

Oana: But realistically, we have such a complex economic system that no single factor really makes any difference at all.

Todd: OK. So good. So what does mean for people right now who are looking to get into real estate because the reason report came out and said that there are like three million real estate investors out there buying properties that have said they will buy five or more properties in the next 12 months. That’s a lot of people. That’s like almost one percent of the population.

Oana: Right. You know what? They’re going to do well. The bottom line is like I said, everybody has to live somewhere so these people are buying up homes that maybe were pre-owned, were foreclosed on, they were short sales, whatever, the market is absorbing those homes and then these people are renting these properties back up. Who are they renting them up to? They’re renting them back out to people who either sold on a short sale, were foreclosed on or something like that because we all have to live somewhere.

Todd: Yeah, I agree. OK, good. I think that’s a good analysis. Thanks.

Oana: You’re welcome.

Todd: So that was just the question is really how much do politics influence the value of real estate. And I think Oana, you hit it on the head. Hyperlocal. Even in Las Vegas, they said that prices went up 2 or 3 percent last year but if you had a million dollar house, it’s probably worth a little less. If you bought a $60,000 house last year, it’s probably worth a lot more.

Oana: Right.

Todd: And if you’re in the middle, it depends on what kind of deal you got on your house.

Oana: Right. And especially like here in Las Vegas when you’re looking at it, in some places, property values went up 10, 20 percent in the last year and in some places, they went down. So when they average it out, they came up with some other number.

Todd: Right.

Oana: So even within a city, it is very, very local.

Todd: Good. Awesome. All right. So that’s my update for today and hope to see you on another video. Thanks.